669 Cryptocurrency-Related Money Laundering Cases Reported in Japan

In a story by Nikkei Asia Review, the Japanese National Police Agency (NPA) issued a report showing that 669 cases were reported from April to December 2017. The high number of suspected cases was as a result of a law that was passed in Japan in April, which acknowledged bitcoin as a legal means of payment. The law also required all cryptocurrency exchanges to be legally licensed. The law also obligated the exchanges to report any transactions that aroused suspicion with regards to money laundering activity or drug trafficking. The move was aimed at ensuring that cryptocurrency was not used for illegal financial activities.

The Government Is Tightening the Noose

Although the NPA gave few details on the mechanisms used to filter what constituted suspicious transactions, it is suspected that the majority of cases reported involved those with questionable transactions that were repeated regularly within a short period of time. A report appearing in Coindesk indicated that the high number was as a result of a sustained effort by the government to probe cryptocurrency exchanges, after a theft of about $500 million worth of NEM tokens from Coincheck in January. The government has been on the front foot to ensure investors are protected from such heists, hence the rigorous licensing process.

Cryptocurrencies like Bitcoin, Ripple and Ethereum allow users to make quick and easy trades while remaining anonymous. Their involvement in illegal dealings has been on the rise, which has led to massive government crackdown to bring the culprits to justice. At the moment, there are 16 registered cryptocurrency exchanges in Japan under the new legal regime.

However, there are still exchanges that are yet to be approved which are nonetheless operational, including Coincheck. Japan’s finance minister has ordered the Financial Services Agency (FSA), the country’s top financial watchdog, to conduct a thorough inspection of all the cryptocurrency exchanges that have applied for licensing but are yet to be approved. After the directive, the FSA has ordered all the exchanges, licensed and unlicensed, to show their security protocols and measures applied to curb hacking. On-site inspections are currently ongoing to analyze the reports.

Meanwhile, the police report shows that money laundering cases are on the decline, but the majority of the cases come from the financial institutions. The police expect suspected money laundering cases involving cryptocurrencies to go up following the tight measures and laws in the country.